ECB to continue the supply of emergency funds to Greek banks

Lender of last resort of the Eurozone, the European Central Bank, has told that it will continue to provide liquidity to Greek banks. At the same time, the currency union’s apex authority declared that it will not increase the lending.

ECB’s soothing stand came after the Greek government’s decision to conduct a referendum on July 5th on austerity measures to be adopted by Greece.

Analysts observe that Greek banks may be running out of the money, especially in the context of panic withdrawals and failed talks. How Athens can avoid a Black Monday depends upon the sentiments among the public.

Reports by Bloomberg news agency said that there are indirect instructions to Greek banks to limit the withdrawal. But such measures will spread panic among the public warns experts on bank runs.

Monday is going to be a critical day for Greek banking system. Already reports are indicating liquidity squeeze and ATMs running out of money.

The Greek government has designed many measures to arrest quick withdrawals of money by public. If the banks are reporting too quick flows of cash, government may opt for other type of restrictions like capital controls.

Existing trends at the weekend shows that Greece can’t pass the Monday test without availing emergency liquidity from the ECB.

At the same time, bailout talks are scheduled to be restarted on Monday. The new round is expected to be a heated one in the aftermath of the referendum decision made by Athens.